Centre directs all state governments to check artificial price rise in onion sales

New Delhi: The Centre has directed all state governments including Maharashtra to take action against traders and speculators keeping onion prices artificially high by taking advantage of the seasonal shortage.

Onion prices both in wholesale and retail markets in most parts of the country have seen a sharp increase since July. In the national capital, retail prices of onion are ruling as high as 80 per kg on short supply from key growing states. "All states and Union Territories have been asked to take action against traders/speculators creating artificial price increase of onion taking advantage of seasonal shortage," a senior Consumer Affairs Ministry official said.

Maharashtra, where maximum onion is stored for use in lean season, has been asked to ensure steady supply of the staple vegetable in the consuming markets, the official said. The state government has been directed to intimate the Centre if there is any blockage in supply chain as that can cause price rise, the official added.

Onion prices are under pressure even in the current month as 90 per cent of stored onions of 2012 crop are exhausted and there is only 3-4 lakh tonnes available for consumption, the Ministry said in the status report on onion. Around 27.5 lakh tonnes of onion were stored in the country for consumption in 2013. Of this, 15.50 lakh tones were kept in godowns in Maharashtra, 1-2 lakh tonnes each in Gujarat, Bihar, Karnataka, Madhya Pradesh, Uttar Pradesh, Rajasthan and Tamil Nadu, it said.

Normally, stored onions are consumed during lead period of June-August. The prices continue to rule high as supply of fresh crops from Karnataka and Andhra Pradesh has not been in full swing yet due to delayed harvesting in the wake of rains. “The onion price situation depends on production and market arrivals. Prices tend to peak during September-November and fall during January-March every year. Generally, onion storage gets depleted by August-September," the report said.

The harvesting of early kharif crop in Andhra Pradesh, Karnataka and Tamil Nadu is continuing. Arrival of fresh crop from these states is expected to increase further in the coming days, it added. The government has taken several measures to check prices of onion and improve its domestic supplies. These include allowing their imports and restricting exports.

Nafed suggests hike in onion MEP

To control onion prices that have risen as high as Rs 70-80 per kg in most places, cooperative Nafed has recommended the government further hike the minimum export price (MEP) of onion to USD 900 a tonne.

In August 2013, the government had re-imposed MEP on onion at USD 650 a tonne to curb shipments and control rising prices. Due to fixing of export floor price, onion shipments in August had come down substantially to 29,000 tonnes. "We have submitted a report to the Agriculture Ministry suggesting increasing MEP on onion to USD 900 a tonne," a senior Nafed official said.

The government is keeping a close watch on price situation. It has taken several measures to improve supplies including through imports. The Centre has also directed all state governments to crackdown on hoarders and speculators who are keeping onion prices artificially high.

Meanwhile, Nafed has floated global tenders to import onions but has not taken a decision yet due to phytosanitary issues. Some private traders have imported onions and they are being sold in the domestic market. There is short supply of onion in the country as much of the stored onions of 2012 crop are exhausted and new crop from South India is yet to arrive in huge quantities in the consuming states.